Govt to rejig financial schemes to promote higher education

Written by Kirtika Suneja | Subhash Narayan | New Delhi | Updated: Feb 18 2012, 06:18am hrs
The government plans a major restructuring of schemes governing provisions of financial assistance to students in a bid to encourage them to pursue higher studies and reduce drop-outs.

The ministry of human resource development is giving final touches to a policy which will encourage institutions, especially universities, to become one-stop shops for student-financing while the government would stand as guarantor for a host of education loans. This, sources said, would encourage banks to increase disbursement to this segment. In addition, the quantum of loans on offer for students would also be raised, they said.

The central principle of the new policy is that no student eligible to be admitted should be deprived of higher education for financial reasons.

The trigger for the new policy is the high rate of students dropping out after the secondary education stage. The rate is as high as 40% in classes IX-XII. As per a government analysis, nearly one-fifth of the population cites financial problems as one of the main reason for not pursuing education beyond the secondary level.

"Without demand-side financing, the government's efforts to enhance gross enrolment ratio (GER) for higher eduction may not succeed. Through the new initiatives, we propose to cover a minimum of 50% of the students who reach the secondary level in one way or the other," said an official source privy to the development.

The new policy will benefit as many as 3.2 million students who are enrolled for higher education every year under student loans. That apart, another 400,000 students will be covered through scholarships and free-ships and 2 million will get access to student internships and vocational apprenticeship programmes.

The plan is in line with the government's target of increasing the GER from 15% now to 20% by 2017 and 25% by 2022.

The changes have already been endorsed in a report by a high level committee headed by senior officials of the ministries of human resource development and finance and the Planning Commission. The proposal is also expected to be part of the long-term policy initiative being finalised by the Planning Commission for inclusion in the 12th Plan document.

The total outstanding loans of public sector banks for education in March 2011 stood at R43,074 crore in more than 2.23 million accounts.

"The problem (of lack of financing for higher education) is far more acute today since 80% of the technical and professional education is in the hands of private self-financed institutions where cost is the biggest factor," the high-level government panel on education has said in its report.

Affordability continues to be one of the biggest constraints deterring students from pursuing higher education. This also skews the demand for education since many bright students evaluate courses on the fulcrum of cost rather than aptitude. There is a recognition that the demand-side is to be addressed through several strategies one way is encourage varsities to become one-stop-shop for financing.